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Featured Article

Go Green for Less Green

Kirk Seaman

Shopping for a used hybrid? According to Kelley Blue Book, now may be the time to buy. During the past year, values of used hybrid vehicles have not kept pace with the rest of the market. As a result, buyers may have the perfect opportunity to purchase a used hybrid at significant savings compared to the recent past.

The main reason for this situation is simple: Relatively stable gas prices are reducing the demand for hybrids. In addition, technological improvements in conventional gasoline-powered vehicles are giving some new vehicles fuel-economy numbers close to those of hybrids. The Ford Fiesta with a special trim package, for example, is rated at 40 mpg on the highway.


Hybrid Math Doesn't Add Up

Meanwhile, the overall cost of purchasing and operating a hybrid remains relatively high when compared with conventional, gas-powered vehicles, so buying a hybrid usually doesn't save much money overall. But for those consumers more concerned with protecting the environment with fewer tailpipe emissions than saving a few dollars when they fill up, this may be their moment to take advantage of this segment.

"If shoppers want to buy a brand-new hybrid today, they should keep in mind that it can take upwards of 10 years to recover the premium paid for a hybrid versus a comparable non-hybrid alternative, based on $3 per gallon fuel prices and driving 12,000 miles per year," said Juan Flores, director of vehicle valuations for Kelley Blue Book. "For those consumers considering a hybrid purchase purely to save money on gas, they must consider how long they intend to hold the vehicle."


Reducing The Hybrid Premium

In other words, although hybrid owners may save more in annual fuel costs, it can take years for those fuel savings to offset the additional cost of a hybrid. This is known around the industry as the "hybrid premium." For example, the conventional Ford Fusion has a sticker price of $20,420 and gets 23 mpg city and 33 mpg on the highway. According to fueleconomy.gov, the conventional Fusion has an annual fuel cost of $1,571. The Ford Fusion hybrid, meanwhile, stickers at $28,825, and gets 41 mpg city and 36 mpg highway. Fueleconomy.gov states that the Fusion hybrid has an annual fuel cost of $1,044. With the Fusion hybrid saving $527 per year in fuel over its gas-powered sibling and costing $8,405 more, it will take almost sixteen years for a Fusion hybrid owner to recoup the additional cost.

Kelley Blue Book recently took a look at two high-volume hybrid vehicles, the Toyota Prius and the Honda Civic hybrid, to determine how many years it would take their owners to recover the premium required to purchase a hybrid vehicle as opposed to the closest non-hybrid alternative. For shoppers considering both new and used vehicles, the time required to recoup the hybrid premium with annual fuel savings could be quite substantial.  

If a consumer were to purchase a new hybrid vehicle, they would need more than 10 years to recoup the extra cost of the hybrid. A driver would have to rack up 160,000 miles on a Prius, or more than 190,000 miles on a Civic hybrid, before just breaking even on their hybrid purchase.

If a consumer were to purchase a used hybrid vehicle, however, the time needed to recover the premium would be significantly shorter. For the Civic hybrid, the owner would reach the break-even point just shy of five years, as opposed to the sixteen years needed for a new purchase. This would require only 57,600 miles to be driven before the hybrid premium was recovered, mileage that should be no problem for a Civic. For those in the market for a hybrid vehicle, Kelley Blue Book's best recommendation is to consider buying a used hybrid first.

According to Kelley Blue Book's research, when buying used, consumers should consider purchasing the hybrid alternative of an existing nameplate as opposed to an all-hybrid vehicle like the Prius. That's because it can take twice as long to recover the hybrid premium for a Prius as opposed to a Honda Civic hybrid in the used market. Over time, the Prius has acquired a large following that has lead to stronger resale value, in addition to that already costly hybrid premium. By sticking to a hybrid vehicle built off an existing platform (Civic hybrid, Fusion hybrid, and so on) a consumer has a far better chance of coming out ahead on their purchase.


What About The Battery?

If there's one big concern about buying a used hybrid, it would be the battery. Car shoppers should keep in mind that automakers have separate warranties on the battery and hybrid components that tend to be longer than normal. For instance, Toyota's warranty on the Prius battery is eight years or 100,000 miles, as compared to five years or 60,000 miles for its conventional powertrain warranty. Ford offers the same 8/100 coverage for its hybrid Fusion.


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